Demonetization has been a process adopted by the government to eliminate many issues that have challenged governance since time immemorial, such as black money, terrorist financing and counterfeiting of fake currency. By taking the sudden and swift step of declaring Rs 500 and Rs 1000 notes illegal, the government thought of removing these hurdles. Various benefits were expected from this in the short, medium and long term. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get Original Essay Demonetisation, an attempt to curb black money from the economy was partly successful and partly not. The upside of the currency of Demonetization consists of: DIGITALIZATION: The people of India responded quickly to the change and within days various online methods like e wallet em wallet, private players like Paytm, along with the government. systems like Rupay, BBPS and Paytm were used frequently. BRAKE ON BLACK MONEY: The fact that Rs.1000 and Rs.500 notes were found floating in rivers and drains, shows the extent to which black money has been curbed. CONTROL OF INFLATION: Inflation has been controlled as a huge amount of money has been extracted from the economy. Real estate rates will nosedive, which will benefit the middle class and other migrants who enter and are unable to purchase homes because real estate prices are so high. The government expects things like this can happen, but some of its expectations have backfired, as fake currencies have started to creep into the economy, which shows that the new currency security features have been compromised. The main reasons for the increase in fake currency are multiple: poor border patrolling, which led to the increase in fake currency smuggled from Pakistan and Bangladesh, corruption among public officials which led to easy distribution, storage and printing of currencies false. ,Easy access to cash and increase in withdrawal limits,people involved in printing fake currency had enough time after November 8 to start printing again,political funding requires huge amounts of money so in that case, fake currency can easily come into circulation, funds from various terrorist activities such as naxalism, terrorism or cross-border smuggling, drug or human trafficking across borders, funding of various NGOs, money from tax havens or P-notes and lack of awareness among the masses about security features of the new currency. Poor people were used by rich people to deposit money into their accounts, so rich people avoided the penalty and could keep their undeclared income. There was UNCONTROLLED BLACK MONEY OVERSEAS because black money held in foreign tax havens, in the form of gold, could go unexploited. Furthermore, there is a serious setback for the international position of the Indian economy. If we look at the agricultural sector in rural areas, we see that farmers generally use cash in most of their transactions and India is also largely a cash economy. Cash transactions in this rural economy far exceed the total number of electronic transactions made on a daily basis. Also, in tribal areas, the poor, through intermediaries, are able to exchange their currencies at higher rates due to unavailability of information and helplessness. However, demotization has become a hot issue in the debate regarding the effects on the national economy. However, in the current era of globalization, theA nation's internal policies have a domino effect on other economies. Nepal – Most Affected: Conducts daily transactions with India in INR for needed supplies, and shortage of new currency has caused shortages of essential goods and affected Indus-Nepali trade. It also requires the INR for international exchange with other currencies, but has banned all financial transactions in Indian rupees and called the new notes "unauthorized and illegal." Lack of reliable information -> Nepal government is unsure how much INR currency is held by its citizens (especially in informal areas) and how exchanging it would be a tall order in the short term (according to Nepali Rashtra Bank, around INR 35 million in 500 and 1000 rupee notes are present within its formal financial network There were also security concerns as the RBI was reluctant to freely provide currency due to the possibility of their unscrupulous use (terrorism – used by ISI). , generation of black money) Bhutan – Bhutanese currency is not much affected by 1:1 ratio with Indian currency and Indian currency is legally tradable in Bhutan and Bhutanese Central Bank offers currency at least without much accumulation (even a better one synergy with RBI, government), there would be a short-term shortage in the number of religious travelers to India to visit Bodh Gaya and the monasteries, also loss of tourism revenue in Bhutan government of Indian travelers Problems for Bangladesh Sri Lanka and Myanmar: allows the use of rupee as a parallel currency due to their confidence in India's financial strength and political stability, but this move has shaken them. It affected small and marginal traders (border haat) along. borders are those who generally trade in INR cash. Bangladeshis, SL visiting India for medical purposes were facing big problems to arrange INR funds and are stuck with older high denomination notes. This hit the extremists hard especially in Myanmar as the currency they had hoarded for so long became just a piece of paper with zero value. Pakistan - Blow to its wrath Na-pak: As it has reduced smuggling of goods/arms and terrorist activity in Kashmir region due to non-availability of new currency to finance their heinous purposes and also created the fake currency note La printing press maintained by ISI is worthless and hence terrorist financing has suffered a huge setback. Marginal appreciation of the currency due to elimination of black money and fake money from the formal system would to some extent further increase the cost of goods imported from India. It would also bring a push towards gold in these economies (safe haven). In the short term, demonetization would certainly affect the broader economy of neighboring nations to some extent, and the move is also seen as going against the principles of the “Neighborhood First” policy. . Furthermore, the Government in these nations would now be cautious about the free trade of INR and may instead push for the use of their own currencies. One of the main objectives behind the demonization move was to counter the menace of fake currency which was plaguing the country's economy and was being used to finance terrorism. Key measures taken to address the problem: Improve awareness among the masses about the security features of banknotes to control the flow of fake currency. Rigorous border patrols. Punitive measures to be taken against corrupt officials, smugglers, etc. The newly issued currency has multiple security features. such as bleed lines, embossed printing etc..